RETAIL MARKET COMMENTARY Q3 | 2018 RETAIL MARKET COMMENTARY | Q3 2018 02

Q3 2018 AT A GLANCE

PRIME RENTS OCCUPANCY (UNITS) CURRENT PRIME ZONE A RENTS (€ PER SQ. M.) GRAFTON STREET 96% GRAFTON STREET €7,000

HENRY STREET €4,500 HENRY/MARY STREET 98%

DUNDRUM TOWN CENTRE €4,500

BLANCHARDSTOWN CENTRE €3,300 KEY ECONOMIC INDICATORS SHOPPING CENTRE €2,800

PAVILIONS SHOPPING CENTRE €2,600 INDICATOR PERIOD ANNUAL % CHANGE €2,200 TOTAL EMPLOYMENT Q2 2018 3.4%

FULL-TIME EMPLOYMENT Q2 2018 4.2%

UNEMPLOYMENT RATE August 2018 5.6% OCCUPIER ACTIVITY (MONTHLY) CONSUMER SENTIMENT KEY LETTINGS IN Q3 2018 August 2018 (NATIONAL) -0.5% CONSUMER SENTIMENT Q2 2018 () 3.7%

OVERSEAS VISITORS Q2 2018 6.6%

AVERAGE WEEKLY EARNINGS Q2 2018 3.3%

RETAIL SALES VOLUMES August 2018 (EX. MOTOR) 7.1% RETAIL SALES VALUES August 2018 (EX. MOTOR) 6.1%

NEW HOME COMPLETIONS Q2 2018 34%

RESIDENTIAL PROPERTY July 2018 PRICES (NATIONAL) 10.4% RESIDENTIAL PROPERTY July 2018 PRICES (DUBLIN) 7.2%

CONSUMER SENTIMENT INDEX RETAIL SALES – ANNUAL GROWTH 120 YEAR TO AUGUST 2018 110

100 All Retail Businesses All Retail Businesses (Ex. Motor) 90 Hardware, Paints & Glass 80 Books, Newspapers & Stationery Electrical Goods 70 Motor Trades Department Stores 60 Furniture & Lighting Food 50 Clothing & Footwear 40 Bars -5% 0% 5% 10% 15% 20% 30

VOLUME VALUE Jan 11 Jan 17 Sep 11 Jan 12 Jan 13 Jan 15 Jan 16 Jan 18 Jan 14 Sep 17 Jan 10 Sep 12 Sep 13 Sep 15 Sep 16 Sep 18 Sep 14 May 11 Sep 10 Jan 09 May 17 May 12 May 13 May 15 May 16 May 18 Sep 09 May 14 Sep 08 May 10 May 09 Sources: Bannon Research, CSO, KBC/ESRI Consumer Sentiment Index Consumer Sentiment 3 Month Moving Average RETAIL MARKET COMMENTARY | Q3 2018 03

The

ECONOMY CONSUMER ECONOMY

Irish economic growth has continued at pace with Consumer confidence remains high with the KBC/ESRI Consumer Sentiment Index the European Commission now predicting strong reaching 107.6 in July despite considerable global uncertainty. This represents an annual growth of 5.7% in 2018 with personal consumption improvement of 2.4% or a rise of 172% since sentiment reached its lowest point in 2008. and investment remaining key drivers. The second Growth in Irish consumer sentiment contrasts with declines in similar indicators for quarter of 2018 saw an increase of 74,100 jobs or the US and Euro area, however the UK market also experienced a slight upturn in July. 3.4%% in employment (seasonally adjusted) year on Earnings increased in all 13 employment sectors in the year, with the largest increases year, with total employment standing at 2.25 million recorded in the financial, insurance and real estate activities sector (6.5%). at the end of July. Tourism continues to contribute positively to the Irish economy with just over six million overseas AVERAGE WEEKLY EARNINGS visitors to Ireland from January to July 2018 representing an annual increase of 7.8%. Total €760 tourism earnings from overseas visitors to Ireland increased by 5% in Q2 from the same period twelve €740 months prior to reach €1.97 billion. €720

Tourism Ireland expect tourism €700 spend to reach a record €6 billion €680 for the year. €660

€640

2013 Q22013 Q32013 Q42014 Q12014 Q22014 Q32014 Q42015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q2 RETAIL MARKET COMMENTARY | Q3 2018 04

RETAIL SALES

Rising employment has continued to boost disposable In terms of face-to-face spending, debit card points of incomes and support retail sales growth, with the latest sale transactions in August 2018 reached €5.2 billion. Of data showing overall retail sales volumes (seasonally this, €1.7 billion was attributable to retail, €820 million to adjusted) to have risen by 5.7% in the year to August 2018 services and €374 million to food and leisure. while sales values rose by 5.1%. When motor trades are excluded, sales volumes saw annual growth of 7.1% with Recent data from the CSO has provided clarity on the sales values up 6.1% year-on-year. The sectors with the true level of new home construction, which totalled 16,278 largest annual increases in volume terms were electrical units in the year to June 2018. This represents an annual goods (18.1%), household equipment (13.1%) and furniture increase of 40% demonstrating housebuilding activity and lighting (9.7%). to be growing strongly again. A further 824 new homes were created during this period through the completion of New data from the Central Bank shows total e-commerce previously unfinished properties. This, coupled with gains expenditure to have reached €1.57 billion in August. As in employment should further bolster consumer demand previously noted a significant proportion of this is likely for DIY and household items with the retail park sector attributable to non-retail purchases such as online media expected to benefit greatly. subscriptions, bills and travel expenses.

Krispy Kreme, RETAIL MARKET COMMENTARY | Q3 2018 05

OCCUPIER ACTIVITY

FOOD AND BEVERAGE OTHER

• The Ivy have opened their first Irish restaurant on Dawson Street • Therapie Clinic have agreed a new lease on Level 3 • Central Plaza have reportedly 3 food and beverage deals agreed • Kingdom of Sweets have opened a short term on Henry Street and have • Krispy Kreme have opened in Blanchardstown and the store is reported an ongoing requirement for Grafton Street to be one of their busiest ever openings • The JD Sports store on Mary Street is on the market to let following • Wahlburger, US burger chain owned by actor Mark Wahlburg and his their move into brothers have a requirement for 4 stores in Ireland • Carrolls Irish Gifts have taken a new store on O’Connell Street • Leon, the UK based “Natural Fast Food” concept are looking at • Dunnes Stores on Grafton Street is rumoured to be on the market to let opening stores in Ireland with 3 reportedly under offer • The Pamela Scott lease on Grafton Street is also on the market • Irish restaurant Just Wing It have agreed to take a new store on South • Mountain Warehouse have an ongoing requirement for new stores Great George’s Street around the country • Ginzeng Asian fusion restaurant are looking for new stores around • Trespass have opened new stores in Stillorgan Shopping Centre and The Dublin Square, Tallaght. They are due to open a flagship store in November at • Fallon & Byrne are about to open a new gastro bar in Rathmines Mahon Point Shopping Centre,Cork • Independent Irish brands such as Mad Egg, Wishbone, Bujo and Ely are • Superdrug are continuing to open stores around Ireland with ongoing actively seeking additional locations requirements • The Works have just taken occupation of a new store in Gorey Shopping Centre CLOTHING AND FOOTWEAR • Kays Kitchen, 5 Guys and Caffe Nero have agreed to take units at the redeveloped Frascati Shopping Centre, Blackrock • Rituals have opened their first Irish store in Dundrum Town Centre. • Patisserie Valerie are looking to expand in standalone stores following Rituals have also just signed a lease on a new store in Blanchardstown the successful trial stores in Debenhams, although recent financial issues Centre and are fitting out a new store on Grafton Street may put this on hold • Short term lettings have been agreed in Dundrum Town Centre with • Zizzi have agreed to take an assignment of the Prezzo lease in Liffey Gym+Coffee and Couture Club Valley and are actively looking for further locations • JD Sports have opened a new flagship store in Pavilions Swords • Las Iguanas have agreed an Irish franchise agreement and there is an • Inditex the owner of brands such as Zara, Berskha and Pull & Bear active requirement for space have a continued requirement for additional space in Liffey Valley • Butlers Chocolates have opened a new store at the corner of Dawson Shopping Centre Street and Duke Street • Carluccios and Milano are actively looking for new stores. GROCERY • Dundrum Town Centre have reportedly agreed terms with three new • The Park Carrickmines has successfully tendered the supermarket in restaurants in the space formerly occupied by Hamleys, Cath Kidston the new Quadrant 3 development and Gant • The marketing for the new 500,000 sq. ft. Cherrywood Town Centre • The North Face have agreed to take an assignment of the Only store on development has been launched and the agents are currently targeting Grafton Street and are currently fitting out the store potential occupiers • The White Company have opened on Grafton Street • Timberland, The North Face and Superdrug have agreed to take new stores in Jervis Shopping Centre and Stradivarius are moving from level 1 RETAIL PARK MARKET to the ground floor • Harvey Norman have signed leases on two new stores, one in Gateway • POCO by Pippa are rolling out pop up shops around the country with Shopping Park, Galway and the second in Sligo Retail Park. Gateway Athlone Town Centre having recently traded successfully Shopping Park Phase II is now under construction and is the first major retail development to take place outside Dublin since 2008 • PC World Currys have opened a new store in Waterford Retail Park • Petstop have secured the former Maplin unit in Limerick One Shopping Park RETAIL MARKET COMMENTARY | Q3 2018 06

AVAILABILITY COMMENT

• There is currently one vacant unit on Grafton Street. • New store requirements from both existing and new to We understand No. 3 Grafton Street was under offer market multinational and UK retailers are being stymied by however the transaction is not progressing, and the an unfounded impression that Ireland is trading with the same agents are re-marketing. issues as the UK and in some cases is being treated as a region of the UK rather than its own independent and unique market. • There is currently one vacant unit on Henry Street, No.1 GPO Buildings which was formerly occupied by • Retailers who are firefighting in terms of trading and Barratts and is under contract to Hotel Chocolat. performance issues in the UK have little time or resources to look to acquire new stores in the Irish market. • A further 4 units including two occupied by JD Sports are available but occupied and trading at present. • Using data collected from over 250 retailers we can show how turnovers remain on a positive trajectory with some star • Occupancy across the Bannon portfolio of shopping performing sectors such as Sports, Electrical Goods, Home centres and retail parks stood at 94% in September. Furnishings and Hardware. • In Dundrum Town Centre, we understand the owners • Some forward-thinking retailers have identified the ability to are seeking additional food and leisure occupiers grow turnover performance in Ireland and are acquiring new for the former Hamley’s unit and are making good stores, however it is a trend that is not as strong as it should be. progress. The external unit formerly occupied by Urban Outfitters is occupied on a short term basis by • With the retail conference season upon us, Bannon’s retail Halloween HQ. team are meeting as many retailers as possible explaining the positive underlying fundamentals of the Irish retail market and • There is a vacant unit on the first floor of the Jervis trading performance that is not only bucking the trend of what Shopping Centre which is believed to be of interest to is happening in the UK but in most cases, out performs sales three traders. densities of some of the best performing UK stores.

RENTS

• Rents were largely unchanged this quarter as supply and demand remained static across the main shopping centres and retail parks. • Zone A rents on Grafton Street remain at €7,000 per sq. m. with no new deals completed this quarter. Similarly, rents remain in the region of €4,500 per sq. m. on Henry Street. Zone A rents in The Square, Tallaght have improved to €2,200 per sq. m. • The latest SCSI/IPD Quarterly Property Index figures show retail rents for Grafton Street to have increased by 3.3% in the 12 months to March 2018, while Henry Street saw rental growth of 0.4% annually. • Overall shopping centre rents, as recorded by the IPD index, increased 6.1% in the year to March, while retail warehouses are seeing sustained rental inflation of 2.8% annually.

Overall shopping centre rents, as recorded by the IPD index, increased 6.1% in the year to March, while retail warehouses are seeing sustained rental inflation of 2.8% annually Royal Hibernian Way CGI Hambleden House 19-26 Lower Pembroke Street Dublin 2

BANNON RETAIL DEPARTMENT

James Quinlan Darren Peavoy Daniel McLaughlin Jennifer Mulholland Director Director Divisional Director Divisional Director [email protected] [email protected] [email protected] [email protected]

Leanne Kane Stephen Fawcett Cian Dunne Surveyor Surveyor Surveyor [email protected] [email protected] [email protected]

CONTACT

+353 1 647 7900 www.bannon.ie www.linkedin.com/company/bannon www.twitter.com/bannon

PSRA: 001830

Disclaimer: This report is published for general information and is not to be relied upon. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty or guarantee of same. Reproduction of any part of this publication is not permitted in any form without prior written consent from Bannon